Correlation Between Compagnie Financière and Swatch Group

Can any of the company-specific risk be diversified away by investing in both Compagnie Financière and Swatch Group at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Compagnie Financière and Swatch Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Compagnie Financire Richemont and The Swatch Group, you can compare the effects of market volatilities on Compagnie Financière and Swatch Group and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Compagnie Financière with a short position of Swatch Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Financière and Swatch Group.

Diversification Opportunities for Compagnie Financière and Swatch Group

0.38

Correlation Coefficient

Compagnie Financière  Swatch Group

Weak diversification

The 3 months correlation between Compagnie and Swatch is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Financire Richemont and The Swatch Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swatch Group and Compagnie Financière is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Compagnie Financire Richemont are associated (or correlated) with Swatch Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swatch Group has no effect on the direction of Compagnie Financière i.e., Compagnie Financière and Swatch Group go up and down completely randomly.

Pair Corralation between Compagnie Financière and Swatch Group

Assuming the 90 days trading horizon Compagnie Financière is expected to generate 3.19 times less return on investment than Swatch Group. But when comparing it to its historical volatility, Compagnie Financire Richemont is 1.27 times less risky than Swatch Group. It trades about 0.02 of its potential returns per unit of risk. The Swatch Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  693.00  in The Swatch Group on April 24, 2025 and sell it today you would earn a total of  42.00  from holding The Swatch Group or generate 6.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Compagnie Financire Richemont  vs.  The Swatch Group

Compagnie Financière

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Financire Richemont are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Compagnie Financière is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Swatch Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Swatch Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Swatch Group may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Compagnie Financière and Swatch Group

The main advantage of trading using opposite Compagnie Financière and Swatch Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Financière position performs unexpectedly, Swatch Group can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Swatch Group will offset losses from the drop in Swatch Group's long position.

The idea behind Compagnie Financire Richemont and The Swatch Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.